Is Buying Gold and Silver a Good Investment?
It is currently very important for investors to consider buying both gold
and silver. In September 2010, gold climbed to a record $1,296 spot price
per ounce. Silver also continued its steady gain, reaching $21 per ounce.
A financial investment source, ArabianMoney, predicts gold to gradually
increase in value to $5,000 within the next three years. Because of the
historic 15:1 ratio of the average price of gold to the average price of
silver, the gradual increase in gold value could also result in a rise in
the price of silver from $21 per ounce to $315 per ounce in three years.
Gold and Silver Versus Paper Currency
Gold and silver have become good investments thanks to a continually weak
financial market and government action. The US dollar's decreased value
compared to the Euro and concerns of excessive printing by governments
has forced many investors to invest in commodities that have a proven
ability to retain value. Since August 2001, gold has risen in value by
$900 per ounce and silver by $14.50 per ounce. Gold is expected to pass
$1,600 per ounce by the end of 2011 and silver will continue to shadow
its rise in value during a period where slumping global currencies have
made buying gold and silver a good investment. By investing in gold and
silver instead of paper currency, you can expect to see a larger return
on your investment in years to come.
Factors that Influence Your Investment in Gold and Silver
In order to maximize the return on your investment in gold and silver,
you'll need to understand all of the factors that might affect the value
of your investment. These factors include the daily market spot price,
the type of coin or bar you're purchasing, and external economic data.
The daily market spot price changes each day in accordance with supply
and demand. For example, if the supply of gold or silver were to increase
in one day while the demand decreased, the daily market spot price would
decrease. The daily market spot price might also fluctuate depending on
the location of the commodity exchange you look at. For example, the spot
price in the US might vary from the spot price in Japan.
The type of coin or bar that you invest in will also have an effect on
the price you pay when you make your purchase. This is because government
fees usually cause the value of bullion coins and bars to be above the
spot price. Certified rare coins are also more valuable than the spot
price would indicate, simply because of their rarity. For example, the
value of a proof American Buffalo gold coin is currently $1,500, which is
4-5% above the spot price of gold.
External economic data can also have a significant influence on the
prices of gold and silver. Generally, the spot price of precious metals
such as silver and gold will increase during an economic downturn. This
is because, as stock and bond investments become less appealing,
investing in gold and silver becomes more appealing. As more people
invest in precious metals, the demand (and their prices) increase. It is
wise to carefully watch external economic data such as stock indexes and
the Dollar Index in order to plan the best time to invest.
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